- I sometimes use Google live translation to read web site in Chinese (Peoples Bank of China releases for example, but IBM is also working on real time web translator, see here . How about FoxLingo, the new meta translation toolbar, which provides instant webpage translation while preserving the original layout of the page. It supports 45 languages with over 1000 different language pairs, and combines the power of 34 language translation engines, for easy comparison of different translation versions. (I found translators’ info here). Some economists are predicting that speed limit (in US in particular) has gone down, because we have exhausted ways to improve productivity as fast as we did in the past 10 years. I do not think so, quite the contrary. I believe that we are on the eve of the biggest productivity leap EVER!!! We produce enginners by hundreds of thousands every year (India, China), we exchange knowledge faster than ever (knowledge is the most important growth-generating asset, and it multiplies by exchanging), we are web-2.0-powered. Our statistical offices are simply not up to the task, they still measure crops, bricks and machinery, while they have only vague idea about intangible assets. In XXII century we (our children) will probably speak about the biggest growth measurement error we made in a human history, in early XXI century.
- This will make news, for sure. In two months there will a wiki-type service launched to facilitate leaking government documents, called wikileaks. Take a look at washington post article. The idea is to promote an open and transparent government.
- Interesting aspect of globalization. Pizza Patron, a pizza chain in United States accepts pesos and dollars, see NYT article. Why do I mention that 59 restaurants in US now accept pesos. Becasue the world demographics, which is a sure and perfectly predictable trend, will lead to much stronger migration than we can think of today. Are we ready for that?
- China and AESEAN 10 sing an agreement to create a free trade zone in Asia by 2015, see Times article . Surely there are numerous political hurdles, but I do reiterate my call – Asia common currency – asian – will be born sooner than we may anticipate today.
- Kuwait based funds expand into Sudan, which enjoys large foreign direct inflows, writes gulfnews. Chinese funds and oil funds are poured into Africa. While European media focus on Zimbabwe and Somalia hardship, we sould also take note that Asia and Gulf countries build links with Africa real fast.
- Howard French blog presents interesting stories about companies doing busienss in China and South East Asia. 25% Copernic summary of his website follows:
“Africa first captivated New York Times journalist Howard W. French more than twenty-five years ago, but his knowledge of and passion for the continent has the depth of a lifetime association.
China is choking on its success at attracting the world’s factories.
As a vote of confidence in Vietnam, the decision by Intel early in 2006 to spend $350m building a new factory in the emerging South-East Asian economy was hard to beat.
And yet, before the year was out, the American chipmaker went further and raised its investment to $1 billion.
In the Johor region of Malaysia, another global firm, Flextronics, has fired up the production lines of a new M$400m ($110m) factory to make computer printers for another American firm, Hewlett-Packard.
Further east, in Indonesia, Yue Yuen, a Hong Kong-based shoemaker, has been ramping up its output of trainers and casual footwear for brands like Nike and Adidas.
Production is increasing at the firm’s factories in China and Vietnam too, but output in Indonesia is growing the fastest.
Although all three companies had different reasons for their decisions, the outcome was the same: they chose to avoid China’s thundering economy in order to put their factories elsewhere in Asia.
In the calculus of costs, risks, customers and logistics that goes into building global operations, an increasing number of firms are coming to the conclusion that China is not necessarily the best place to make things.
With its seemingly limitless supply of cheap labour and the rapid acquisition of technological prowess, China appears to be unstoppable.
Indeed, the perception is that every factory closing in America or Europe is destined to reopen in China.
Most things nowadays might seem to be made in China, but North America remains the true workshop of the world.
Manufacturing and exports are growing rapidly in other parts of Asia (see chart 1).
Taken together, South Korea, Taiwan, India and the Association of South-East Asian Nations (ASEAN) increased their share of global manufacturing from less than 7% to more than 9% in the decade to 2003.
Most significant of all are rocketing wages.
In spite of the mass migration of workers from China’s vast interior to the coast, pay for factory workers has been rising at double-digit rates for several years.
For managers, the situation is worse still.
China has become a victim of its own success, sighs Peter Tan, president and managing director of Flextronics in Asia.
He finds it especially hard to hire and retain technical staff, ranging from finance directors to managers versed in international production techniques such as â¬oesix sigmaâ¬ and â¬oelean manufacturingâ¬.
Average wages for a factory worker, combined with social security costs, came to almost $350 a month in Shanghai in 2005 and almost $250 a month in Shenzhen.
By comparison, monthly wages were less than $200 in Manila, around $150 in Bangkok and just over $100 in Batam in Indonesia.
Domestic Chinese companies have led the charge into the hinterland and a small, but growing, number of foreign firms have followed them.
With each shoe passing through up to 200 pairs of hands on the production line, Yue Yuen’s operations are highly labour-intensive.
For that reason a number of companies in industries such as medical devices have instead set up shop in Singapore.
The standard answer is for cheap labour, but most big technology companies go there for the market,â¬ he says.
Naturally, industries such as textiles and clothing will always seek places with cheap labour, hopping from country to country as wages rise and equalise.
Most observers reckon India’s manufacturing evolution is ten years behind China’s, but progress is unlikely to be as swift or as smooth.
A country that puts a higher value than China does on democracy and the rights of the individual will inevitably find it harder to push through infrastructure projects and reform to sensitive areas such as the rigid labour market.
With 560m people, the ASEAN trade bloc also offers a big population.
South-East Asia has been the chief beneficiary of companies’ decisions to diversify out of China.
The problem is that the ten ASEAN nations have yet to form a single market.
Although the region offers plenty of opportunity for export-based manufacturing, as a single market it remains highly fragmented.
Companies want to be able to set up one factory to serve the whole region, but numerous barriers prevent them from doing so.
Governments in the region have announced bold plans to create the ASEAN Economic Community by 2015, with a free flow of goods, services and investment.
Following a free-trade agreement in 1992, tariffs on the majority of goods traded in the region have fallen below 5%.
Much harder to achieve will be the removal of non-tariff barriers, which would call for harmonising thousands of industry standards and customs regulations, and setting up independent bodies to govern regional trade and mediate in disputes.
Few believe that the ASEAN Economic Community will come about as its architects hope.
Less developed nations, such as Myanmar and Laos, will integrate at a slower pace than countries like Singapore and Malaysiaâ¬”if they integrate at all.
Nonetheless, progress is being made and the rapid rise of China and India has added urgency to the process.
Twelve areas, including electronics, health care, textiles and logistics, have been singled out as the first to be worked on.
Trainers to peddle harder In the meantime, governments must also think how to get their industries into higher-value manufacturing.
Although ASEAN received record levels of foreign direct investment in 2005, at $37 billion, much of the manufacturing coming into the region is basic, labour-intensive assembly work that adds only a little value.
I get worried about ASEAN, says Roland Villinger, a Bangkok-based partner at McKinsey, a consulting firm.
He thinks the region urgently needs to add to the sophistication of its manufacturingâ¬”partly because India and China are improving so fast.
He agrees that a lot of factories in ASEAN are part of a China-plus-one or plus-two strategy.
However, he believes South-East Asia needs to be more than just a hedge against risk in China.
And ASEAN has its own share of risks.
Thailand’s new military government seems to be doing its utmost to deter investment, including tighter curbs on foreign ownership and botched currency controls.
In May last year, for example, Intel opened a new research centre in Kulim employing 900 people to design microprocessors, chipsets and motherboards for use in its products worldwide.
And in Thailand efforts to make the country the Detroit of the Eas are starting to pay dividends at least they were until the present troubles.
Thailand was set to overtake the United States last year as the world’s largest maker of one-tonne pick-up trucks.
For the moment, as foreign investors choke on their China investments and look elsewhere, that does not matter too much.
But as India sorts out its problems and as China grows into an ever bigger market, South-East Asia needs to integrate its own markets or see its newly found popularity among manufacturers slowly fade.”